U.S. Site Selection Profile: Aerospace and Aviation

The aerospace and aviation sectors continue to experience ups and downs in terms of market activity.  The impact of safety concerns with some of Boeing’s jets has led to a slowing of deliveries to major airlines. On the other hand, much like the automotive space, the industry is in the early stages of innovation, whether as the re-introduction of supersonic travel, greener engine and aircraft design, or potential electrification of the industry. Further, the industry remains heavily clustered in certain U.S. markets, which can be an advantage, but also a challenge.  

For both established and growing original equipment manufacturers (OEMs) and suppliers, it is critical to identify the optimal location to maintain and grow their operations.  This blog highlights some key data points and trends that Site Selection Group monitors.  

States with strong aerospace growth and presence

The table below represents job growth and overall presence in the aerospace industry by state from 2023-2024. We measure growth in terms of absolute job count change and percentage change, as looking at either of these figures on their own does not tell the full story. We also give weight to states with a strong existing presence in the industry, as states with a small existing presence can show abnormally large percentage increases based on adding a small number of jobs. As a result, the data in the table below reflects an index score that blends those data points.  

The map shows some key trends in regions that have stronger presence and growth profiles in the aerospace industry:

• Strong Growth in the Mountain West
  States like Utah and Arizona land at the top of the list with strong recent growth in this industry. In general, these states offer favorable operating environments for manufacturing and maintaining a deep base of aerospace workers.  

• Southeast Growth
  It’s no surprise that Florida is one of the top states for aerospace presence and growth, especially given its space sector. States like Georgia, South Carolina, Alabama and North Carolina have also seen significant development in the industry.
  
  
• Texas and Oklahoma
  While Texas has a larger base in the industry, especially in markets like greater Dallas and Houston, Oklahoma scores more favorably in this analysis for growth over the past year. Markets like Tulsa and Oklahoma City can be interesting alternatives to companies looking first at Texas.
  
  
• Mixed Results in Legacy States
  The analysis shows a mix of results in other states with large, established aerospace clusters. While California is not typically at the top of the list for manufacturing growth, the data shows favorable expansion for the aerospace industry. On the other hand, states with a large, existing industry presence have seen slower, or even negative growth, including states like Connecticut and Washington.  

Top recent projects and incentive packages

In addition to state-level trends, Site Selection Group also carefully monitors major project and incentive announcements in the aerospace sector. The map below represents the count of incentivized aerospace projects by state for 2023-2024, with darker blue states indicating a higher count of project announcements. Please note, this only includes projects that received publicly reported economic incentives.

Key projects of interest include:

• Boeing
  St. Louis, Missouri – The company announced a $1.8 billion investment to expand its current operations near the St. Louis International Airport, adding 500 jobs. The project was supported by nearly $300 million in incentives from the state, county and city.  
  
  
• Airbus
  Mobile, Alabama – Airbus announced an expansion of its operations in Mobile to add $150 million in investment and 1,000 jobs. The project was supported by a number of entities including the county, city and local school system.  
  
  
• Northrup Grumman
  Utah – The defense contractor announced a nearly billion-dollar investment at multiple facilities in Utah which will generate more than 1,200 jobs. The state supported the project with more than $100 million in tax credits through the Utah Economic Development Tax Increment Finance Tax Credit (EDTIF).  
  
  
• Joby Aviation
  Dayton, Ohio – While the three companies above are well-known in the aerospace industry, Joby Aviation is a good example of new technology. The company, which makes electric vertical take-off and landing aircraft, announced its first full-scale assembly operation, resulting in a $500 million investment and 2,000 jobs. The company was awarded $325 million in performance-based state and local incentives.  

SSG’s 2024 outlook for aerospace

Aerospace and aviation have traditionally been very cyclical industries, and Site Selection Group expects that trend to continue into 2024 and beyond. So, while there may be some pullback in the short term, overall innovation, growth and geographic drivers will continue to drive this industry. Based on the data and our project experience, we expect a couple of key trends to continue: 

• Big Regional Decisions
  West, Midwest or Southeast?  While every company is different, SSG continues to see its aerospace clients faced with the fundamental geographic question of balancing logistics vs. accessibility to key personnel. This is especially true for companies looking to either relocate or expand their operations out of legacy aerospace markets like Southern California, greater Seattle or Connecticut. For some companies, sheer logistics costs can make that decision straightforward, as access to suppliers, ports and customers can easily sway a company to look in a specific region. But for others, suppliers can be flexible, or products can be made smaller, which opens more flexibility in the search. Often, companies looking to relocate want to retain key personnel, so locating a new plant in a market near existing operations (e.g. Phoenix or greater Salt Lake City - near Southern California) is a solution. 
  
  
• Attractive Aerospace Markets are Getting Competitive
  A decade ago, a California-based aerospace company looking to control costs and retain access to a skilled workforce in a state with a more favorable operating-cost environment could easily look to other western market alternatives like Phoenix, Salt Lake City, or further east into markets like Dallas-Fort Worth.  However, as those markets and states have continued to grow, so have costs. As a result, Site Selection Group finds itself analyzing more and more secondary markets as a more cost-effective alternative to those larger hubs. For example, our site selection analysis for aerospace requirements may lead to a careful review of smaller markets (e.g. Waco, Longview and Abilene in Texas or Tulsa, Oklahoma, in comparison to the larger hub of Dallas; or Logan or Ogden in Utah to compare to the larger hub of Salt Lake City). Ultimately, companies need to decide what type of market they want to operate in, but smaller markets are becoming more attractive. 
  
  
• Sites Matter, but They May Become Less Constrained
  Like other manufacturing sectors, it can be challenging to find an aligned site that meets the key technical and utility requirements for aerospace projects. Because of the boom in big box distribution over the last several years, SSG continued to see prime airport sites (either with tarmac access or nearby), gobbled up by distribution projects. However, as we continue to see a slowdown in the distribution space, SSG believes land availability for aerospace and aviation projects may open up a bit over the next several months.